Can investors bet on a Vegas turnaround?
Tourism has been leaving Las Vegas this year, and that has hurt the bottom line for casino operator Caesars Entertainment (NASDAQ:CZR).
Caesars woes continued in the third quarter as the company missed earnings estimates, posting a net loss for the quarter.
As a result, Caesars stock was down some 12% after the market opened on Wednesday. It is now down about 42% year-to-date.
- Revenue: $2.87B, roughly the same as Q3 2024. It was below estimates of $2.89B.
- Net loss: $55M, down from a $9M net loss in the same quarter a year ago.
- Loss per share: 27 cents, down from 4 cents per share loss in Q3 2024. This fell short of estimates of a 3 cent per share loss.
The struggles stem in large part from a decline in business at its Las Vegas properties. Its Vegas properties saw revenue decline 10% year-over-year to $952 million. Through the first nine months of the year revenue is 5% lower to about $3.0 billion.
Net income from Vegas plummeted 40% in Q3 to $132 million. For the first three quarters it is off 24% to $521 million.
“Our Las Vegas segment Adjusted EBITDA declined during the quarter due to lower city-wide visitation and poor table games hold,” Tom Reeg, CEO of Caesars Entertainment, said.
In the first half of 2025, visitation to Las Vegas was down 11% to 3.1 million visitors. That trend continued in July and August, with visitation down 12% and 7% in those months, respectively, according to KOLO Las Vegas.
Regional and digital perform well – sort of
The problems in Las Vegas were offset by strength in its regional casinos and its digital products. Caesars has more than 40 properties across 15 states outside of the Las Vegas area, and these performed well. Revenue for its regional segment increased about 6% in Q3 to $1.5 billion. However, that did not translate to improved profits, as net income fell 55% to $56 million due to higher expenses due to resort upgrades, interest payments, and other factors.
It was the same story for Caesars Digital, which includes its sports betting app. Revenue was up 3% year-over-year to $311 million, but the group had a net loss of $21 million due to sports betting losses.
Volumes in our Caesars Digital segment were strong, driven by continued product improvements while Adjusted EBITDA was negatively impacted by lower-than-expected sports hold during September,” Reeg said.
Caesars is also facing high debt. While Caesars has been paying down its debt, it is still about $11 billion and that has led to high interest payments which have been a drag on earnings. In Q3, Caesars had a net loss of $240 million in its corporate line item, which includes debt interest payments. That is down from a $390 million net loss in Q3 of 2024, in part due to lower interest rates and paying down some of its debt.
Hopeful for Vegas turnaround
The Las Vegas visitation numbers weren’t as bad in August, so Reeg and Caesars are hopeful that things will pick up.
“As we look to the fourth quarter, we anticipate improved operating performance given stronger occupancy in Las Vegas, continued momentum in our Caesars Digital segment and stable operating trends in our regional portfolio,” Reeg said.
Caesars stock got a slew of analyst downgrades after the earnings report, but it is still a consensus buy among analysts. JPMorgan Chase lowered its target to $38 per share and Truist dropped it to $30 per share. Both of these would still be up significantly from the current $19 per share price.
The stock is cheap trading at 11 times earnings, but given the Vegas headwinds and debt, investors should be wondering if it’s a value.
